On Sept. 2, 2013, this column prognosticated on the NLRB’s mission focus now that it had a full five member Board and noted that it would further refine the parameters of its bargaining unit standard under Specialty Healthcare II, amid criticisms from the management-side bar that it would lead to a proliferation of “micro” units. Recently, in Kindred Nursing Centers East, LP dba Kindred Transitional Care and Rehabilitation - Mobile v NLRB (Aug. 15, 2013), the 6th Circuit Court of Appeals upheld Specialty Healthcare II, denied the employer’s challenge to the appropriateness of the petitioned-for bargaining unit as found by the NLRB and granted enforcement of the board’s order directing the employer to recognize and bargain with the union as the exclusive bargaining representative of a unit of certified nurses’ assistants (CNAs).

In Specialty Healthcare II, the board addressed issues related to bargaining units in non-acute healthcare facilities, specifically, nursing homes. The Board overruled Park Manor Care Center, a test the board applied to determine the appropriateness of a bargaining unit in a nursing home; returned to applying the “traditional community-of-interest approach” to nursing homes; and placed the burden on the party contending that a readily identifiable group of employees who shared a community of interest was nevertheless inappropriate and that excluded employees shared an “overwhelming” community of interest with the included employees. Under this framework, it found the union’s petitioned-for unit of CNAs appropriate and rejected the employer’s contention that the unit must include certain employees from the maintenance department.

The circuit noted that it must uphold the voard’s bargaining unit determination unless the employer establishes that it is arbitrary, unreasonable, or an abuse of discretion, and it must uphold the board’s statutory interpretations if they are reasonably defensible. The employer did not argue that the board abused its discretion in overruling Park Manor, calling it a “non-issue.” Rather, it argued that the board abused its discretion by 1) adopting a new approach rather than returning to the traditional approach; 2) inappropriately adopting an approach from another area of labor law; 3) violating the Statute in its adoption and application of appropriate bargaining unit tests; and 4) making all of these changes, unlawfully, through adjudication rather than the rule making process. .

Addressing the employer’s argument that Specialty Healthcare II adopted a new approach rather than returning to the traditional community-of-interest approach, the 6th Circuit noted that judicial review of bargaining unit determinations is limited, and that statutorily, the Board must find an appropriate bargaining unit, not the most appropriate unit. The court noted that using the community-of-interest test only requires that the board find that groups of employees in the same bargaining unit share a community of interests sufficient to justify their mutual inclusion in a single bargaining unit.

The 6th Circuit also stressed that the Board has the authority to develop standards for determining whether one unit is more appropriate than another, and to choose to follow or depart from precedent so long as its departure is explained. The court concluded that the board explained its reasoning, and that prior approaches resulted in unnecessary litigation. Recognizing that the board adopted a community-of-interest test based on some of the board’s prior precedents, and that it explained its reasons for doing so, the 6th Circuit found that the board did not abuse its discretion in determining that a bargaining unit limited to CNAs was appropriate.

The circuit also concluded that the Board did not abuse its discretion in adopting the overwhelming-community-of-interest test. While the employer argued that the overwhelming-community-of-interest standard represented a “material change in the law,” the court observed that the board has used the overwhelming-community-of-interest standard before, and that its adoption was not new. The court also concluded that since the board overruled some of its precedents and chose to follow a precedent approved in other circumstances, it may do so provided it explained why. The court denied the employer’s petition for review and granted the board’s petition for enforcement.

The 6th Circuit’s decision upholding Specialty Healthcare II has broadcast an “all clear” signal to the NLRB regarding the appropriateness and enforceability of its unit determination decisions and orders to bargain. The board has been fully informed that if it explains its rationale for adopting, modifying or overruling precedent, its decisions will most likely be found to have come from within its statutory authority and will not be found to be an abuse of discretion.

Inside counsel should keep an eye on how unit determination decisions evolve in the coming months to assess whether organized labor has success in petitioning for smaller, more homogeneous units of employees with stronger communities of interest. Likewise, management must carefully consider which employee groups it will seek to include given that it will now have the burden of showing other employee groups have an “overwhelming” community of interest with the proposed unit. Prudent employees should embark on a human resources audit to examine job classifications, descriptions and pay grades, supervisory structure and span of control, interchange of employees and functional integration of operations.